Introduction + Definition of Branch Accounting + Accounting for Branches - Procedure + Types _ Branches « Accounting for Dependent Branch - Debtor System, Final Account System « Illustrations + Exercises g 3 juction aris A business enterprise may concentrate its activities at only one place or could spread across the different parts of a region, state, nation or the world. The offices or outlets or establishments of business enterprises at other places other than the head office are called Branches. A parent office which controls the activities of all the Branches is known as Head office. Section 2(9) of the Companies Act, fefines a Branch Of (a) any establishment described as a branch by a company; (b) any establishment carrying on either the same or substantially the same activity as that carried on by the Head Office of the company; or (©) any establishment engaged in any production, processing or manufacturing but does not include any establishment specified in the Central Government's order under section 8. f Branch Accounting = To know the profit or loss of each branch separately. To know the financial position of each branch separately. To know the exact goods requirement of various branches. To evaluate the progress and performance of each branch. To calculate the commission payable to the Branch manager, if it is based on profits. To make necessary suggestions for the improvement of any branch. 8. Toexercise proper control over each branch. wecounting for Branches 7% Though a branch is not a separate legal entity, transactions of the branch must be accounted for. Apart from being mandatory (according to section 228 of the Companies Act, 1956), account- ing for branches serves the following purposes: spawns meee Scanned with CamScanner“Advanéed Financial Accounting 1. For ascertaining the profitability and financial position of the branch. 2. _ For assessing the feasibility and viability of operating a branch. 3. For evaluating the progress and performance of the branch. 4. For taking decisions relating to branches like whether to expand or not, etc. 5. For enabling the calculation of commission payable to the branch by head office. 6. For ascertaining the correct profitability and financial position of the business enter- prise, by incorporating the results of the branch. Accounting Procedure for Branches” For the purpose of accounting of branches in the books of head office, branches have been classified into the following types: 1. Domestic Branches, 2. Foreign Branches, Domestic or home branches are further classified into the following types: 1. Dependent Branches. 2. Independent Branches, Foreign branches are always regarded as independent branches. The following chart represents the classification of branhes for the purpose of accounting and the various methods of accounting. BRANCHES Domestic Branches Foreign Branches a a) Dependent Independent Branches Branches [— Methods of Accounting, Debtors System Final Account Stock and & System Debtors System Scanned with CamScannerBrangh Recounts or me a “184 Domestic Branches Domestic Branches refer to the branches located in the same country in which the head office is located. Foreign Branches Foreign Branches refer to the branches located outside the country in which the head office ts located. Dependent Branches Dependent Branches refer to the branches which are under the control of head office for its administration. The accounts of such branches are maintained by the head office. Dependent branches can be further classified into two categories, viz., (a) Fully controlled branches. (b) Partly controlled branches. Fully controlled branches are those which have no powers for any decision making. They are not permitted to make any purchases on their own, but must depend on the supplies of the head office. Such branches cannot retain any amount collected from its debtors or from any other source, but must completely remit it to the head office. The expenses of such branches are totally met by the head office. Partly controlled branches are those which are given some limited powers for decision making. Such branches are given a certain amount of flexibility in Its operations. It can make any purchases on its own; in times of need and emergency, and need not wait for the supplies of the head office. It can retain the collections and meet some expenses. The balance of collections after meeting expenses must be remitted to the head office. ACCOUNTING FOR DEPENDENT BRANCHES Features of Dependent Branches 1. Goods are supplied by the Head office. Branch has no right to purchase goods directly. 2. Head office can supply the goods either at cost price or at invoice price. 3, Branch is required to sell the goods either for cash or credit or for both cash and credit depending on the instructions of head office. Scanned with CamScanner‘Advanced Financial A 4. All the regular expenses of branch like rent, salary advertisement etc are paid by Head Office through cheque. But, petty expenses like postage, telegrams, entertainment etc are paid by the branch. Even these petty expenses are paid by the branch out of the Petty cash sent by the head office on the imprest system. 5. The branch fs required to deposit the cash sales proceeds and cash collected from the debtors completely to Head Office directly. 6. The branch do not maintain compelete set of books. Only the following books are normally maintained. (a) Cash Book: It is maintained to record the receipts and payments of cash by the branch. (b) Petty Cash Book: It is maintained to record the receipts petty cash and payment of petty expenses by the branch, (c) Sates Book: It is maintained to record the credit sales of goods. (d) | Memorandam Stock Register: It is maintained to record the goods recovered from Head Office, goods returned to Head Office, goods sold to the customers and the opening and closing stack of goods. {e) Total Debtors Accounts: To record the credit sales made to customers. 7. Branch do not maintain complete set of accounts. Therefore Head office maintains necessary accounts of branch on the basis of stock statements, cash statements, petty cash statements, statement of debtors etc. sent by the branch to Head office. === Methods of Maintaining Accounts 97 777 ead: The accounts of the dependent branches are maintained by the head office. At the end of every accounting period, the head office ascertains the results of the branch, under one of the following methods: 1. Debtors System. 2. Final Accounts System. 3, Stock and Debtors System. ‘The head ‘office’ has'the option to adopt’ any OF the above systems!» How fe systems would be.the same. Under this system, the head office prepare a Branch account as a nominal account. At the end of the accounting period the head office Prepares a Branch Account to ascertain the profit or loss of the branch. The assets and liabilities of the branch at the beginning of the accounting year is treated as given by the head office and those atthe end of the year is treated as returned she branch to the head office. The format of Branch Account prepared by the Head office forseoe vane ing the results of the branch is dependent upon two situations, viz, 1. When the head office sends goads to the branch at cost price; and 2, _When the head office sends goods tothe branch at inflated p ['Noter The formats given below are applicable for ascert ly.controlled branches. : Scanned with CamScanner1. When the head office sends goods to the branch at cost price: (A) When thehead office sends goods to the branch at cost price and instructsthe branch to sell only for cash: Accounting enteries in the books of Head office 1. For goods sent to branch Branch Account Or To Goods sent to Branch Account 2. For goods returned by branch Goods sent to branch Account To Branch Account Or 3. For the transfer of balance of goods sent to branch Goods sent to branch Account Or To Purchase Account or Trading Account 4. For payment of branch expenses Branch Account To Cash or Bank Account or 5. For remittances received from Branch Bank Account To Branch Account Or 6 For recording the closing assets at branch Assets at Branch Account To Branch Account 7. For closing the Branch Account (a) _ In case of profit: Branch Account To General P & L Account (b) In case of Loss: General Profit & Loss Account To Branch Account The following is the format of the Branch Account in this case: or Or or Dr. Books of Head Office - Branch Account for the year ended Particulars v Particulars” c ‘To Opening Assets By Opening Liabilities ~ } Opening Stock at Branch XXX Opening Creditors at Branch “ox © Opening Debtors at Branch 2Xx ‘Opening Outstanding expenses at Branch] 3x [Opening Petty Cash at Branch | xx | ~ By Bank Account (Remittance) ~ E ‘Opening Furniture at Branch XXX Cash Sales we = Opening Prepaid expenses at Brangh xxx: Receipts from Debtors RK To Goods sent to Branch Account | xxx | By Goods Sent to Branch Account aoa { (with the cost price of goods (vith the cost price of goods | sent by head office to branch) returned by branch to head office) To Bank Account: xxx | By Closing Assets (with the amount of branch Closing Stock at Branch expenses met by head office) Closing Debtors at Branch To Closing Liabilities Closing Petty Cash at Branch Closing Creditors at Branch XXX Closing Furnitare at Branch | > Closing Outstanding expenses Closing Prepaid expenses at Branch 5 at Branch xxx | By General Profit & Loss Account To General Profit & Loss Account} Xxx (Loss, ifany) ; | (Profits) i E ‘ = 5 XXX S : Scanned with CamScanner‘Advanced Financial Accounting (a) Apart from the above items, no other item must be shown in the Branch Account. (b) The value of fixed assets at the end of the accounting period must be shown after adjusting depreciation. ()_ For ascertaining any missing information about Branch Debtors like opening balance of debtors or collection from debtors or closing balance of debtors, a Memorandum Debtors A/c must be prepared. (4) For ascertaining any missing information about Branch Creditors like opening balance of creditors or payment to creditors or closing balance of creditors, a Memorandum Credl- ; tors A/c must be prepared. (e) For ascertaining any missing information about Branch Bills Receivable like opening bal- ance of bills receivable or collection from bills receivable or closing balance of bills receivable, a Memorandum Bills Receivable A/c must be prepared. {f) For ascertaining any missing information about Branch Bills Payable like opening balance of bills payable or payment to bills payable or closing balance of bills payable, a Memo- | randum Bills Payable A/c must be prepared. (g) For ascertaining any missing information about Branch Cash and Bank Balance like open ing bank balance or collections and remittance of the branch or closing bank balance, a Memorandum Cash/Bank A/c must be prepared. N THE HEAD OFFICE SENDS GOODS TO THE BRANCH AT COST PRICE ilustration 1 [when branch is authorised to sell only for cash) aoe ALtd. with its Head Office in Bengaluru has a Branch at Mysure. You are given the following particulars relating to Mysure Branch for the year ended 31.3.2014. Stock at Branch on 1.4.2013 332,600 Petty cash at Branch on 1.4.2013 10 Goods sent to Branch 245,600 Goods returned by the Branch 33,900 Cash sales at Branch 371,900 Cash sent to Branch for expenses: Salaries 12,800 Prepare Branch Account in the books of H.0. Rent 33,000 Pettycash %2,600 18,400 Stock at Branch on 31.3.2014 cae orn | Petty cash at Branch on 31.3.2014 no Scanned with CamScannerBranch Accounts Solution: In the Books of ALtd. Bengaluru Head Office Or. Mysure Branch Account for the year ended 31 March 2014 cr. Particulars is if Particulars ie fa To Stock at Branch 32,600 | By Goods sent to Branch 3,900 To Petty cash at Branch 110 | By Bank Account: To Goods sent to Branch 45,600 Cash Sales 71,900 To Bank Account By Closing stock at Branch 37,100 Salaries 12,800 By Closing petty cash at Branch 90 Rent 3,000 Petty cash 2,600) 18,400 To General P/L Account 16,280, (Profit) 4,12,990 1,12,990 j {llustration 2 [when branch is authorised to sell only for cash 3 Rajee Bros. operate the retail branch at Bengaluru. All purchases made by the H.O. at Mumbai, goods being charged out to the Branch at cost price. All cash received by the branch is remitted to Mumbai. Branch petty expenses are paid out of an imprest which is reimbursed by the H.0. from time to time. From the following particulars relating to Bengaluru Branch you are required to prepare Branch account in the books of the H.0. and ascertain profit. Balances on 1* April 2014: z Stock at cost 8,000 Petty cash 800 Plant 10,000 Balances on 31% March 2015 Stock at cost 7,000 50,000 Goods sent to branch Petty expenses paid by the branch out of imprest 2700. Cash sales during the year 270,000 Sale of plant on 1.4.2014 7800. (Book value of plant on the date of sale 7900) 25,000 Expenses paid by the H.O. It is required to write off the plant at 20% p. [8U, B.Com. April 1998] Solution In the Books of Mumbai H.O. Dr. Bengaluru Branch Account for the year ending 31.3.2015 cr Particulars 7 [Particulars 7 To Stock at Branch 8,000 | By Bank Account: To Petty Cash at Branch 800 Cash Sales 70,000 To Plant at Branch 10,000 Sale of Plant 800 To Goods sent to Branch 50,000 | By Gen.P/L Account 100 To Bank Account 700 Loss on sale of plant [900-800] [Petty expenses] By Stock at Branch 7,000 To Bank Account 5,000 | By Petty Cash at Branch 800 [Expenses] By Plant at Branch 7,280 To General P/L Account 11,480} [10,000 - 900 = 9, 100 - 20%) (profit) 85,980 85,980 Scanned with CamScannerFinancial Accounting, When the head office send goods to the branch at cost price and instruct the branch to sell both for cash as well as on credit: Total Debtors account Sometimes, opening balance of debtors, closing balance of debtors, credit sales and cash received from debtors may not be given in the problem. In order to.ascertain thesamea total debtors account is prepared as follows Total Debtors Account Particulars a 7 [uPartieulars £ To Balance b/d xx | Bycash oe To Credit Sales xx | ByB/RReceived a To Bills Receivable xx | BySales returns ie [B/R dishonoured} By Bad Debts =e ByDiscountaliowed Xx ByBalancec/d bts XxX ee IMustration 3 [when closing debtors is not given], S 35 ss Zamana Ltd., Mysure opened a branch at Bengaluru on 1.4.2014. Branch is instructed to sell the goods both for cash and credit. All cash collections are to be remitted to H.0. sends cash to Branch to meet the expenses at Branch. From the following details, prepare Bengaluru Branch ‘Account in H.0. Books. Also prepare Branch Debtors Account therein. 7 Stock of goods at Branch on 1.4.2014 5,000 Petty Cash on 1-4-2014 150 Furniture on 1-4-2014 2,500 Goods sent to Branch at cost 50,000 Goods returned from branch at cost 3,000 Expenses paid by H.O. 10,000 Cash sent by H.0. for petty cash 250 Remittances from Branch Cash sales 2,500 Collections from debtors 42,500 45,000 Credit Sales 51,000 Closing Stock at Branch at cost on 30 September. 2014 17,000 Closing Petty Cash 50 Depreciate furniture at 10% p.a. ‘ount allowed to debtors 1,800 [BU, B.Com. April 1995] ‘Memorandum Debtors Account Particulars eee: —5t | Particulars ae ~ i To Balance b/d ~ | By Cash Ave 42,500 To Credit Sales 51,000 | By Discount Allowed 4,800 By Balance c/d (Bal. fig.) 6,700 51,000 [51,000 d Scanned with CamScannerIn the Books of Mysure Head Office Or. Bengaluru Branch Account Cr. Particulars = 7 | Particulars => rn. = el To Stock at Branch 5,000 | By Goods sent to Branch (Returns) 3,000 To Petty Cash at Branch 150 | By Bank Account To Furniture at Branch 2,500 Cash sales 2,500 To Goods sent to Branch 50,000 Received from Debtors 42,500 45,000 To Bank Account [Expenses] 40,000 | By Closing Stock at Branch 47,000 By Closing Petty Cash at Branch 50 To Bank Account [Petty Cash] 250 | By Furniture (2500-125) 2,375 To Gen P&L Account 6,225_| By Closing Debtors at Branch 6,700 74,425 74,125 Or. Branch Debtors Account cr. Particutars 7 | Particulars a To Balance b/d ~ | By Balance ¢/d 6,700 To Bengaluru Branch Account 6,700 6,700 6,700 Hote: Depriciation of Furniture is to be calculated for six months (i.e., from 1st April 2015 to 30th Sept. 2014). 10/100 x 2500x 6/12=125. illustration 4 [when opening debtors is not given] TE a XYZ Ltd. with its Head Office in Bengaluru has a Branch at Mysure. Goods are supplied to the Branch at cost. The expenses of the Branch are paid from Bengaluru and the Branch keeps a sales ledger and the Debtors ledger only. From the following information supplied by the Branch, prepare Branch Account and Branch Debtors Account in the books of Head Off < Stock at Branch on 1.4.2014 16,700 Goods sent to Branch during the year 48,600 Total sales at Branch 78,300 Cash Sales 19,300 Cash Received from Debtors 54,400 Petty Cash at Branch on 1.4.2014 20 Goods returned by the Branch 5,900 Cash sent to Branch for expenses: Salary 13,200 Petty Cash 2,600 Rent 3,200 19,000 Stock at Branch on 31.3.2015 —— ___ 20,800 Petty Cash at Branch on 31.3.2015 200 Debtors at Branch on 31.3,2015 18,300 Dr. Total Debtors Account cr. Particulars @ | Particulars ‘ a ¥ TA To Balance b/d (Bal. fig) 13,700 By Cash Account 54,400 To Credit sales 59,000 By Balance c/d 18,300 [78,300-19,300} 72,700 72,700 Scanned with CamScanner: In the Books of Bengaluru H.O. Mysure Branch Account Dr for the year ending 31% March 2015 Cr Particulars © | Particulars Z To Stock at Branch 16,700 | By Goods sent to Branch Account| 5,900 To Debtors =t Branch 13,700. | By Bank Account: To Petty Cash at Branch 20 Cash Sates 19,300 ‘To Goods sent to Branch Account 48,600 Received from Debtors | 54,400| 73,700 To Bank Account By Stock at Branch 20,800 Salary 13,2 By Debtors at Branch 18,300 Petty Cash 2,600| By Petty Cash at Branch 200 Rent 3.200] 19,000 To General P/L Account 20,680 oo 1, 18,500 18,900 Or Branch Debtors Account Cr. Particulars 7 | Particulars et To Balance b/d 13,700 | By Mysure Branch Account 13,700 To Mysure Branch Account 18,300 | By Balance c/d 18,300 32,000 32,000 Illustration 5 [when closing debtors is not given] From the following particulars, prepare the Mysure Branch Account in the books of Bengaluru H.0. Stock on hand at Branch 1.4.2014 Debtors at Branch 14.2014 Petty Cash at Branch 1.4.2014 Fumiture at Branch 1.4.2014 Prepaid Insurance 14.2014 Outstanding Salary 1.4.2014 Goods sent toBranch Cash sales by Branch Credit sales by Branch Amount collected from debtors Amount received by the H.0. directly from the branch debtors Discount allowed to Branch debtors Cash sent to Branch for Expenses for Petty Expenses for Insurance premium (paid upto 30% June 2014 at the rate of 7600 p.a.) Goods returned to H.O.from Branch Goods returned to branch by debtors Stock on hand at Branch on 31.3.2015 Petty Expenses at Branch Depreciation on branch furniture is 10% p.a. z 10,000 4,000 500 2,000 150 100 80,000 1,30,000 40,000 35,000 2,000 100 Scanned with CamScannerBranch Recounts Solution: Total Debtors Account Particulars £ Particulars’: a en To Balance b/d 4,000 | By Cash A/c 37,000 To Credit Sales 40,000 By Discount allowed 100 By Sales Returns 2,000 By Balance c/d (Bal. fig) |__4,900_ 44,000, 44,000 In the Books of Bengaluru H.O. Dr. Mysure Branch Account for the year ended 31 March 2015, cr. Particulars z 7 | Particulars z cE To Stock at Branch 10,000 | By Outstanding Salary 100 To Debtors at Branch 4,000 | By Bank Account To Petty Cash at Branch 500 Cash Sales 1,30,000 ‘To Furniture at Branch 2,000 Received from Debtor | 37,000 }1,67,000 To Prepaid Insurance 150 | By Goods sent to Branch 1,000 ‘To Goods sent to Branch Account 80,000 | By Stock at Branch 5,000 To Bank Account By Debtors at Branch 4,900 Rent 2,000 By Petty Cash at Branch 650 Salaries 2,400 [1500-850] Petty Expenses 1,000 By Frepaid Insurance 150 Insurance 600} 6,000 | By Furniture at Branch 1,800 To General P/L Account 77,850 [2,000-200] (profit) l1,80,500 }1,80,500 Illustration 6 [when closing debtors is not given : From the following particulars relating to Bengaluru Branch for the year ending 31st March 2015. Prepare the necessary account in the Head Office Books: z Stock at the Branch on 1.4.2014 22,500 Debtors at the Branch on 1.4.2014 45,000 Petty cash at the Branch on 1.4.2014 "450 Goods sent to Branch during 2014-15 3,78,000 Remittances from branch during 2014-15: For cash sales 90,000 Received from Debtors 315,000 4,05,000 Credit sates during 2014-15 —— 342000 Cheques sent to Branch during 2014-15, For Salaries 13,500 For Rent and Rates 2,250 For Petty Cash 1,650 17,400 Stock at the Branch on 31.3.2015, 37,500 Petty Cash at the Branch on 31.3.2015 300 Goods returned by the Branch 3,000 Scanned with CamScannerare = SP Aaaincad Financial Aceotitiig Solution: : Total Debtors Account Pacthcilars SS | Particutars To Balance b/d 45,000 | By Cash Account To Credit Sales 3,47,000 | By Balance ¢/d(Bal. f1g.) 3,687,000 oe “In the Books of H.0. or. Bengaluru Branch Account for the yaar ended 31" March 2015 Gr. Particulars g © | Particulars ee Ch a To Stock at Branch 7,500 | lly Bank Account To Debtors at Branch ‘| 45,000 Cash Sales 90,000 To Petty Cash at Branch 40) Recelved from Debtors _3,15,000 | 4,05,000 To Goods sent to Branch 3,78,000 | By Goods sent to Branch 3,000 To Bank Account By Stock at Branch 37,500 Salarles 13,500 By Debtors at Branch 70 Rent and Rates 2,250 By Petty Cash at Branch Petty expenses 1,650 17,400 To General P/L Account | 54,450 A50 J, Bia? 17,800 | 800 17,800 Branch Debtors Account Partleulars Z| Particulars £ To Balance b/d 45,000 | By Bengaluru Branch Account 45,000 To Bengaluru Branch Account 72,000 | By Balance c/d 72,000 [1,417,000 217,000 Mlustration 7 [when closing Debtors and Cash are not given] Nirmala Stores, Bengaluru ts having fts Branch at Kolar, Goods are supplied to the Branch at cost price. Branch has been instructed to sent all cash daily to the Head Office. All the expenses are paid by the Head Office except petty expenses which are met by the Branch Manager. From the following particulars prepare branch account in the books Nirmala Stores, Bengaluru, Stock on 1.4.2014 Sundry Debtors on 1.4.2014 Cash in hand on 1.4,2014 Office Furniture on 14.2014 Goods sent to Branch Goods returned to Head Office Goods returned by debtors Cash recelved from debtors Cash Sales Credit Sales Discount allowed to debtors Expenses paid by the Head Office Rent Salary Printing and Stationery Petty expenses pald by Branch Manager Scanned with CamScannerBranch Accounts Depreciation fs to be provided on branch furniture at 10% p.a, Stock at Branch on 31,3.2015 16,000 Solution: Total Debtors Account Particulars © [_ Particulars a To Batance b/d 9,000 | By Cash Account 30,000 To Credit Sates 30,000 | By Discount Allowed 600 By Goods returned by Debtors 420 By Balance c/d (Bal. fig.) |_7,920_ 39,000 39,000 In the Books of H.0. Or. Kolar Branch Accounts for the year ended 31* March 2015 Porticutars = | Particulars : £ To Stock at Branch 15,000 | By Goods sent to Branch To Petty Cash at Branch 400 | By Bank Account: To Debtors at Branch 9,000 Cash Sales 50,000 To Office Furniture at Branch 2,400 Receipts from Debtors | 30,000] 80,000 To Goods sent to Branch 85,000 | By Stock at Branch 16,000 To Bank Account By Debtors at Branch 7,920 Rent 1,200 By Petty Cash at Branch[400-280] 120 Salaries 2,400 By Furniture at Branch 2,160 Printing & Stationery 300 | 3,900 (2,400-240) By General P/L Account ]1,15,700 (Loss) Illustration 8 [when closing debtors and petty cash at Branch are not given] From the following particulars relating to Tumkur Branch for the year ending 31* March, 2015. Prepare Branch account in the books of Head Office. Stock at Branch on 1.4.2014 Branch Debtors on 1.4.2014 Petty Cash at Branch on 1.4.2014 Furniture at Branch on 1.4.2014 Prepaid Insurance on 1.4.2014 Salaries outstanding on 1.4.2014 Goods sent to Branch Cash sales during the year Credit sales during the year Cash received from debtors Cash paid by the branch debtors direct to Head Office Discount allowed to debtors Cash sent to Branch for expenses: Rent Salaries Petty cash insurance (upto 30" June 2015) Goods returned by the branch z 40,000 15,000 2,000 12,000 2,300 Scanned with CamScanneras Advanced Financial Accounting os ae 7,200 Goods returned by the debtors 36,000 Stock on 31 Maech 2015 31850 Petty expenses ald by the branch Provide depreciation an furniture at 10% p.a. Solution: Total Debtors Account 7 Particulars Z 7 | Particulars Ee To Balance b/d 15,000 | By Cash Account To Credit Sales 1,83,000 | By Cash Account cay By Discount Allowed be By Sales Return 200 By Balance c/d (Bal-fig.) [98,000 | in the Books of H.0. Or. Tumkur Branch Account for the year ended 31st March 2015 Cr. Particulars c ¢ |_Particulars f £ To Stock at Branch 0,00 | By Outstanding salary 4,100 To Debtors at Branch 15,000} By Bank Account To Petty Cash at Branch 2,000} Cash Sales 2,80,000 To Furniture at Branch 12,000] Received from Debtors | 1,57,000 | 4,37,000 To Insurance prepald 2,300 | By Goods sent to Branch 5,000 To Goods sent to Branch 3,30,000| By Stock at Branch 36,000 To Bank Account By Debtors at Branch 31,500 Rent 15,000 By Petty cash at Branch 2,150 Salaries 10,200 [6,000-3,850] Perty Ca: 4,000 By Furniture at Branch 10,800 Insurance 2,600 | 32,400 [12,000-1,200] To General P/L Account 93,500] By Insurance prepaid 650 (Profit) [2,600%3/ 12] 5,27,200 [5,27,200 ustration9 % From the following figures relating to Bengaluru branch opened in 2013-14. Prepare branch Account for 2013-14 and 2014-15. 2013-14 2014-15 z z Goods sent to branch 3,000 4,200 Cash sales 1,200 1,920 Credit sales 2,160 3,000 Cash received from Debtors 1,920 2,400 Discount allowed 30 0 Bad debts 30 60 Cash sent to branch for expenses 420 600 Stock on 31st March 480 840 Petty cash on 31st March 10 2 [Bengaluru University 8.Com June 2007] Scanned with CamScannerBranch necounts fi Solution: Dr Branch debtor Account For the year ended 31st March 2014 Cr. Particulars © | Particulars a To Balance b/d Nit | By Cash Ac 1,920 To Credit Sales 2,160} By Discount allowed 30 By Bad debts 30 By Balance c/d 180 |____} Balancing figure) [eee = 2,160 | 2,160 Dr. Branch Debtors Account for the year ended 31st March 2015 Cr Particulars «| Particulars € To Balance b/d 180 | By CashAsc 2,400 To Credit Sales 3,000 | By Discount allowed 90 By Bad debts 60 By Balance c/d 630 Closing debtors (Bal. fig.) 3,180 3,180 In the Books of Head Office Or. Bengaluru Branch Account for the year ended 31st March 2014 cr Particulars & | Particulars z To Branch Stock A/c Nit | By Bank A/c To Branch Debtors A/¢ Nit] Cash Sales 1,200 To Branch Petty Cash A/c Nil Receipt from Debtors 1,920} 3,120 To Goods Sent to Branch A/c 3,000 | By Branch Stock A/c —| ‘480 To Bank A/c [Expenses] 420 | By Branch Petty Cash A/c 10 To General P& LA/c 370 | By Branch Debtors A/c 180 (Bal. fig.) 3,790 3,790 In the Books of Head Office Dr. Bengaluru Branch Accounts for the year ended 31st March 2015 cr, Particulars z | Particulars z To Branch Stock A/c 480 | By Bank A/c ‘To Branch Debtors A/c 180 | Cash Sales 1,920 To Branch Petty Cash A/c 10 | Receipt from Debtors 2,400| 4,320 To Goods Sent to Branch A/c 4,200 | By Branch Stock A/c 840 To Bank A/c (Expenses) 600 | By Branch Petty CashA/c 12 To General P& LA/C 332 | By Branch Debtors A/c 630 (Bal. fig.) : 5,802 5,802 Note: As there is no information about closing debtors of both the year, it is necessary to open Branch Debtor Account. Scanned with CamScannerAdvanced Financial 2. When the head office send goods to the Branch at inflated price or Invoice price or loaded price: Quite often, for the purpose of maintaining confidentiality about its profit margin, head office sends goods to the branch at a price above the cost price. Such price is calted the loaded price or the invoice price. However, while ascertaining the results of the branch at the end of the year, such load {i.e., the difference between the invoice or inflated price and the cost price) must be adjusted. Objectives of supplying goods at invoice price?! The main objectives of supplying goods at invoice price are {a) To maintain the secrecy of profit earned by the branch ; (b) Tohave effective control over the stock i.e. stock at any time must be equal to opening stock + _.._ Purchases - sales, tment entries « For the adjustment of the excess price included in opening stock Stock reserve Account Or To Branch Account 2. For the adjustment of the excess price included in closing stock Brach Account or To Stock Reserve Account 3. For the adjustment of the excess price included in net goods sent to branch. Goods sent branch Account Or To Branch Account ‘The following is the format for ascertaining the branch results under this situation: Books of Head Office Dr. Branch Account for the year ended —____ Cr. Particulars z Particulars mi SRE To Opening Assets By Opening Liabilities r Opening Stock at Branch 70% Opening Creditors at Branch a Opening Debtors at Branch XXX Opening Outstanding expenses at _ Opening Petty Cash at Branch vox Branch ax Opening Furniture at Branch OOK By Bank Account (Remittance) [> Opening Prepaid expenses at Branch | xxx Cash Sales xx To Goods sent to Branch Account | x Receipts from Debtors ae Less: Returns | x By Closing Assets xX (with the invoice price of goods Closing Stock at Branch 2x “sent to branch) Closing Debtors at Branch x To Bank Account: 20x Closing Petty Cash at Branch xX "(with the amount of branch Closing Furniture at Branch wo _- expenses met by head office) Closing Prepaid expenses at Branch | sex TTo Closing Liabilities By Stock Reserve Ale se" © Closing Creditors at Branch XXX (with profit included in Z Closing Outstanding expenses opening stock) A Pat Branch x0 |” By Goods Sent to Branch Account a TTo Stock Reserve A/c xx (Profit included in the net goods (with profit included in closing stock| send to branch) To General Profit & Loss Account | _ xxx By General Profit & Loss Account ~ (Profits) (Loss, if'any) “ue 200C Scanned with CamScannerBranch Accounts See Illustration 16 When the goods are sent at invoice price or loaded price) ‘REISS Mumbai H.O. has a branch in Chennai to which goods are invoiced by the H.O. at cost plus 25% Cash received by the branch Is daily remitted to H.O. All expenses of Branch are paid from Mumbai H.O. From the following details prepare Chennai Branch Account in H.0. Books. z Stock on 1.4.2014 at invoice price 412,500 Debtors on 1.4.2014 12,000 Goods invoice from Mumbai at invoice price 40,000 Remittances to Mumbai: Cash Sales 116,000 Cash from Debtors 229,500 45,500 Goods returned to H.O. at invoice price 2,400 Cash received from Mumbai for Wages and Salaries 41,000 Rent 3,000 Sundry Expenses 510 14,510 Stock on 30.9.2014 at invoice price 15,000 22,500 Debtors on 30.9.2014 [BU, B.Com. Nov. 1995] Solution: In the Books of Mumbai H.O. Dr. Chennai Branch Account for the half year ended 30.9.2014 cr. Particulars Baa EEE. 2 | Particulars Sze [5 7a To Stock at Branch 12,500 | By Bank Account To Debtors at Branch 12,000 Cash Sales 16,000 To Goods sent to Branch 40,000 Received from Debtors | 29,500] 45,500 Less: Returns 2,400 37,600 By Stock at Branch 15,000 To Bank Account By Debtors at Branch 22,500 Wages and Salaries 11,000 By Stock Reserve Account 2,500 Rent 3,000 [12,500x1/5] Sundry Expenses 510 14,510, By Goods sent to Branch 7,250 To Stock Reserve Account 3,000 137,600x1/5) [15,000x1/5] To General P/L Account 13,140, (Profit) 92,750 92,750 ‘When goods is sent to branch at 25% on cost, the toaded Note: Cost plus profit 25% means it is 25% on cost. -» 25/125 = 1/5) rice will be 125 (100+25). So load as a percentage of invoice price would be 20% (i. illustration 14 [when closing debtors is not given] ORES 2] Shining Shoe Stores invoices goods ti ‘Chennai Branch at 20% profit on sales price. The Branch sends cash daily to the Head Office, and all expenses are paid by the Head Office, except for petty expenses which are met by the branch Manager. From the following particulars, prepare the Branch ‘Account (with necessary workings) in the books of Shining Shoe Stores. 6 7 Stock on 1.4.2014 (Invoice Price) 15,000 Debtors on 1.4.2014 ' 9,000 Cash on 1.4.2014 400 Furniture on 1.4.2014 1,200 Goods received from H.0. (Invoice price) 80,000 Goods returned to H.0. (Invoice price) 1,000 Goods returned by Debtors 480 30,000 Cash received from Debtors Scanned with CamScannerCash Sales Total Sales Discount allowed to Debtors Expenses paid by H.0, Rent Salary Stationery Petty Expenses paid by branch a0 Stock on-31.3.2015 (Invoice Price) ae Depreciation on Furniture at 10% p.a. [8U, B.Com. Nov. 1993] lution: Total Debtors Account Particulars & | Particulars iv To Balance b/d <1 9,000 | By Cash Account 30,000 To Credit Sales 30,000 |. By Sales Returns a [80,000-50,000) By Discount allowed aa By Balance c/d (Bal. fig) |_ 8,220 39,000 39,000 In the Books of Shining Shoe Company Ltd. (H.O.) Dr. Chennai Branch Account for the year ended 31" March 2015 Particulars e z [Particulars To Stock at Branch 15,000] By Bank A/c To Debtors at Branch 9,000] Cash Sales To Cash at Branch 400] Received from Debtors To Furniture at Branch 41,200] By Stock at Branch To Goods sent to Branch 80,000 By Debtors at Branch Less: Returns ~~ [1,000 | 79,000) By Cash at Branch To Bank Account (490-289) Rent 41,200 By Furniture at Branch 1,080 Salary 2,400 [1200-120] Stationery 300 | 3,900] By Stock Reserve [15000x1/5] 3,000 To Stock Reserve {14,000x1/5] 2,800| By Goods sent to Branch To General P&L Account 10,900] [79,000x1/5] (Profit) 1,22,220) flustration 12 = ‘A Shoe Company of Kanpur has its branch at Delhi. Goods are invoiced to the branch at cost plus 25%. Branch has been instructed to deposit daily all cash received by it in the H.0. except petty expenses which are met by the Branch Manager from the petty cash amount sent by the H.O. from time to time. From the following particulars, prepare Delhi Branch account in the books of the H.0. at Kanpur. The Branch sells the goods at the invoice price only. t Stock on 1.4.2014 at invoice price soon Sundry Debtors on 1.4.2014 ied Cash in Hand on 1.4.2014 i Office Furniture on 1.4.2014 a Goods invoiced from H.0. (invoice price) boll Goods returned to H.0. (Invoice price) et Cash received from Debtors e Credit Sales ia Discount allowed to Debtors Scanned with CamScanner175 960 Expenses pald by H.0. For Rent 2,400 For Salary 4,800 For Printing & Stationery oo 7,000 0 Petty Expenses pald by the Branch Manager Depreciation is to be provided on branch {umiture at 10% p.a. [Bengaluru University B Com June 2009] Solution: In this problem Closing values of Stock, Debtors, Petty Cash and Furniture has not been given. So that they should be found out as follows. Working Notes: 1, Calculation of Closing Stock Opening Stock Net Goods Sent to Branch (1,60,000 - 2,000) Less: Cash Sales Less: Net Credit Sales (60,000 - 960) Closing Stock 2. Calculation of Closing Petty Cash t Opening Petty Cash 800 Less: Petty expenses paid by Branch Manger 560 Closing Petty Cash 240 3. Calculation of Closing Value of Furniture —_7 Opening Value of Furniture 2,400 Less: Depreciation [2,400 x 10%] 240 Closing Value of Furniture 2,160 4. Calculation of Closing Debtors 7 Dr. Total Debtors Account Cr. Particulers Particulars 1 Es To Balance b/d 18,000] By Cash A/c 60,000 To Credit Sales 60,000| By Discount Allowed 600 By Sales returns 960 By Balance c/d (Bal. fig.) 16,440 78,000) 78,000 In the Books of Kanpur H.O Dr. Delhi Branch Account Cr. Particulars ¢|_ Particulars l= 7 To Opening Stock at Branch 30,000] By Bank Account To Opening Debtors at Branch 18,000] Cash Sales 1,00, 000} To Opening Cash at Branch 800| Receipts from Debtors _60,000) 1,60,000 To Opening Furniture at Branch 2,400| By Closing Stock at Branch 28,960 To Goods Sent to Branch 1,60,000 By Closing Debtors at Branch 16,440 Less: Returns 2,000 | 1,58,000| By Closing Cash at Branch 240 To Bank Alc By Closing Furniture at Branch 2,160 Scanned with CamScannerbomen M1 PANTY RE RSA eae By Stock Reserve A/c Salary 50,000% 3) Printing & Stationery [sexe 5 To Stock Reserve A/c By Goods Sent to Branch A/c (28080 x 4) 5. To General P & L Account (Bal. fig.) Note: Branch Stock Account is prepared to find out closing stock and Branch Debtors is opened to find out closing debtors, Delhi H.0. of a company invoices goods to its Guvahati Branch at cost plus 20%. The branch also purchases independently from local parties goods for which payments are made by the H.0. all the cash collections of the day is to be remitted to H.O. through a bank account and all expenses of the branch are directly paid by the H.0. From the following, show branch account in H.0. Books: z Imprest Cash 1.4,2014 20,000 31.3.2015 18,500 Sundry Debtors on 1.4,2014 2,50,000 Stock on 1.4,2014 Transferred from H.0. (at involce price) 2,40,000 Direct purchases by branch 1,60,000 Total Sales 17,50,000 Cash Sales 4,50,000 Returns from Customers 30,000 Direct Purchases 4,50,000 Goods sent to branch from H.O. 6,00,000 Transfer from H.O. for Petty cash expenses 25,000 Bad Debts 10,000 Discount to customers 20,000 Cash received from Customers 42,50,000 Branch Expenses 300,000 Stock on 31.3.2015 Directly Purchased by Branch 4,20,000 Transferred from H.O, (at invoice price) 110,000 [8U, B.Com. 1996, 2000, 2010, and 2013] Scanned with CamScannerBranch Accounts : Total Debtors Account Particulars Be |e os Particulars me To Balance b/d 2,50,000| By Cash Account 12,50,000 To Credit Sales 13,00,000] By Sales Returns 30,000 [17,50,000-4,50,000] By Bad Debts 10,000 By Discount Allowed 20,000 By Balance c/d (Big. fig.) 2,40,000 15,50,000} 15,50,000 In the Books of Delhi H.0. Or. Guhathi Branch Account for the year ended 31.3.2015 cr Particulars Be tf Particulars ae oA To Imprest Cash 20,000) By Bank Account To Debtors at Branch 2,50,000 Cash Sales 4,50,000 To Stock at Branch Received from Debtors 12,50,000 From H.0. 2,40,000 17,00,000 Directly purchased 1,60,000| By imprest cash 18,500 To Goods sent to Branch 6,00,000! By Debtors at Branch 2,40,000 To Bank Account 25,000| By Stock at Branch [For Petty expenses] From H.0. 41,80,000 To Bank Account 3,00,000 Directly purchased 4,20,000 [Expenses paid] To Bank Acccunt (directly purchased by Branch) | 4,50,000] By Stock Reserve Account 40,000 To Stock Reserve Account 30,000 [2,40,000x16] [1,80,000x1/6] By Goods sent to Branch 41,00,000 To Gen P&L Account 3,23,500] —[6,00,000x1/6] (Profit) [23,98,500 [23,98,500 nin aS a Sagar Traders of Sagar operate a branch at Mysure. Goods are invoiced to the branch at 20% profit ‘on Sale; Branch advised to deposit cash every day to H.O. account and payments are made by H.0. except petty expenses which are met by Branch Manager. From the following particulars, prepare Mysure Branch Account to ascertain profit or loss of the branch. 5 we Gites ee a ms Stock on 1.4.2014 (.I.P.) 15,000 | Payments made by H.0. Petty Cash 1.4.2014 300 | for Rent 2,400 Debtors on 1.4.2014 8,500 | for Salary 4°200| 6,600 Furniture on 1.4.2014 2,000} Furniture bought on ,1.10.2014. 41,600 Cash Sales. 56,000 | Stock on 31.3.2015 (I.P) 12,000 Total Sales 88,000 | B/Ron 31.3.2005 7/000 Cash from Debtors 28,500 | Sale of furniture on 1.10.2004 ‘900 Goods Sent to Branch 80,000 | (Book value on date of sale % 950) Discount allowed 250 | Depreciate Furniture @ 10% p. a Petty expenses 1,000 Goods returns by branch 360 Outstanding Salary 400 [Bengaluru University B.Com Mar. 2005} Scanned with CamScanner { | | |Tees fener rae Advanced Financlal Accounting Solution: uo Branch Debtors Account cr. Particulars TTT ae Particutars UES To Balance b/d 8,500 | By Cash Received A/c 28,500 To Credit Sates 32,000 } By Bills Receivable Recleved A/c 2,000 [88,000 (-) 56,000) By Discount allowed 250 By Balance ¢/d 9,750 (Gal. fig.) a '40,500 40,500 Calculation of Closing Value of Furniture ’ Opening Value of Furniture on 1-4-2014 2,000 Less: Book Value of Furniture Sold on 1-10-2014 [Before Depreciation for 6 months] [= x 100] 1,000 Book Value of Unsold Furniture 1,000 Add: Book Value of Furniture bought \ 1,600 2,600 Less: Depreciation at 10% PA On Old Furniture (1000 x 10%) 100 On New Furniture [1.00 x 10% x 4] 80 180 Closing Value of Furniture 7,20 Calculation of Amount Utilised out of Cash Received towards Petty Expenses ’ ‘Opening Balance of Petty cash 300 Less: Petty expenses paid during the year 360 Amount utilised out of Cash Received “oO The Books of Sagar Traders a Dr. Mysure Branch Account cr Particulars Particulars Ta To Opening Stock at Branch A/c 15,000] By Bank Account To Opening Debtors at Branch A/c 8,500] Cash Sales 56,000 To Opening Petty Cash at Branch A/c 300} Receipts from Debtors 28,500 To Opening Furniture at Branch A/c 2,000] Sale of Furniture 900 To Goods Sent to Branch A/c 80,000 5,00 | Less: Goods Returned 1,000} 79,000 Scanned with CamScannerBranch Accounts 173 To Bank Account Less: Cash used for Petty 60 | 85,340 Rent 2,400 expenses Salary 4,200 By Closing Stock at BranchAccount | 12,000 Furniture 1,600] 8,200] By Closing Debtors at BranchA/c 9,750 To Closing Outstanding Salary Account| 400 By Closing Furniture at BranchA/c | 2,420 To Stock Reserve Account 2,400} By Closing Bills Receivable at BranchA/c| 2,000 {12,000 x 20%) By Stock Reserve A/c 3,000 ‘To General P & LAccount 14,510] [15,000 x 20%] (Bal. fig.) By Goods Sent to Branch A/c 15,800 [79,000 x 20%] 1,30,310 1,30,310 Illustration 15 [when Branch is permitted to make credit purchases] The Kolar H.O. usually sends goods to its Nelamangala Branch at cost price plus 25%. Further wherever required the branch purchases goods independently. From the following details, prepare the Nelamangala Branch Account in the H.0. Books. Petty Cash balance on 1.4.2014 Petty Cash balance on 31.3.2015, Stock on hand on 1.4.201 Goods received from H.0. Goods purchased from outside Goods sent to the Branch Cash Sales Credit Sales Credit Purchases Collection from Debtors Debtors as on 1.4,2014 Debtors as on 31.3.2015 Office Expenses (cash sent from H.0.) Stock on hand on 31.3.2015: Goods received from H.0. Goods purchased from outside Amount paid to cri Creditors as on 1.4.2014 Creditors as on 31.3.2015 rs (out of collections made) e 4,000 4,000 12,800 3,200 1,36,000 26,000 2,38,000 30,400 2,24,400 16,400 22,400 60,000 12,000, 4,000 29,600 1,600 2,400 [8U, B.Com. Aprit 1994) Scanned with CamScannera 10 Smee Advanced Financial “Accounting Solution: In the Books of Kolar H.0. Dr. Nelamangala Branch Account for the year ending 31.3.2015 < Particulars 7 “t] Particutars Se SERS NET: To Petty Cash 4,000 | By Creditors at Branch 1,600 To Stock at Branch By Bank Account Received from H.0. 12,800 Cash Sales 26,000 Directly purchased 3,200 | 16,000] Received from Debtors | 2,24, To Debtors at Branch I _ 16.400 | 230.200) To Goods sent to Branch 1,36,000| Less: Paid to Creditors | 29,600] 2,20,800 To Bank Account 60,000] By Stock at Branch [Office Expenses} Received from H.0. 12,000 To Creditors at Branch 2,400] Directly purchased 16,000 To Stock Reserve [Load] 2,400| By Debtors at Branch 22,400 [12,000%1/5} By Petty Cash 4,000 To General P&L Account By Stock Reserve 2,560 (Profit) 59,760 [12,800%1/5] By Goods sent to Branch 27,200 [1,36,000*1/5] [Load] 2, 94,560 2,94,560 Note: Credit sales and credit purchases will come in total debtors account and total creditors ac- count but not in Branch account. Mlustration 16 ‘The Basha Company has branches at several places, The following information relates to the Mangalore branch which does not maintain books of accounts, for the year ended 31st March, 2015. : Opening balances (01st April, 2014) Stock 18,750 Debtors 40,500 ‘Transactions during the year at the branch: Cash sales 81,000 Credit sales 52,500 Cash remitted to the Head Office 4,12,500 Furniture Purchased by the branch 9,000 Goods invoiced to the branch 4,36,500 Expenses paid by the Head Office 42,300 Expenses paid by the branch 900 Cash sent to the branch by the Head Office for the purchase of billing machine 9,750 Closing balance (31st March, 2015) Stock 22500 Debtors 13,500 Goods are sent to the branch at 125% of the cost. All the branch expenses are paid by the Head office except the petty expenses paid by thebranch manager. Prepare the Mangaore branch account in the books of Head Office for the year ended 31st March, 2015. [Bengaluru University B.Com Jun. 2008] Scanned with CamScannerBranch Accounts Branch Debtors Account Particulars 7 [Particulars a To Balance b/d 10,500 | By Cash Recevied A/c 49,500 To Credit Sales 52,500 | (Bal. fig.) By Balance c/d | 13,500_ 63,000 63,000 Calculation of Closing Cash at Branch ‘ Cash Sales during the year 81,000 Add: Cash received from Debtors 49,500 1,30,500 Less: Cash Remitted to H.O 1,12,500 Balance of Cash with Branch 18,000 Less: Furniture Purchased by Branch 2,000 9,000 Less: Expenses Paid by Branch 900 Closing balance of Cash at Branch 8,100 : In the Books of Basha Co. Itd ~~ Dr. Mangalore Branch Account cr. Particulars = =T2E]. Particulars a z To Opening Stock at Branch A/c 18,750 | By Bank Account i, 12,500 To Opening Debtors at Branch A/c 10,500 | (Remitted to H.0) To Goods sent to Branch A/c 1,36,500 | By Closing Stock at Branch A/c 22,500 To Bank Account 42,300 By Closing Debtors at BranchA/c | 13,500 (Expenses paid by H.0) By Closing Billing Machine To Bank Account 9,750] at Branch A/c 9,750 (Purchase of billing machine) By Closing Cash at Branch A/c 8,100 To Stock Reserve A/c 4,500 | By Branch Furniture A/c 9,000 1 By Stock Reserve A/c 3,750 [22500 x 4] i 5 [ 8,750. 3] To General P & LA/c 14,100 5 (Bal. fig.) By Goods Sent to Branch A/c 27,300 [1.29500 x 4] 5 2,06,400 '2,06,400 Scanned with CamScanner= = STEELE TENT Aavanced, Financial” Aecolinting ~ FINAL ACCOUNTS SYSTEM ce Under this system, the head office prepares a Memorandum Branch Trading ‘and Profit and Loss Account to ascertain the results of the branch, The format of the Memorandum Branch Trad- ing and Profit and Loss Account is the same as the usual Trading and Profit and Loss Account, the format of which has been given below: ‘Memorandum Branch Trading and Profit and Loss Account Or. = Particulars e Particulars ie To Opening stock at Branch xxx | By Sales of the Branch xx To Goods sent to Branch from vox |= cash > Head Office (less returns - credit oe ~ from branch) By Closing stock at Branch To Purchases (made by branch xxx_| By Gross Loss o/d directly, if any) (Balancing figure) oe = cash 29K , = credit 2x To Direct expenses of the branch Xxx, To Gross Profit c/d 2x (Balancing figure) 3000 x To Gross Loss c/d xxx__| By Gross Profit b/d Ox To Expenses of the Branch XXX é To Bad Debts 2x To Depreciation of Fixed Assets 2x : To Discount allowed Xxx To Gen-P/LAccount 20% |. (Prot TO Notes: {@) The opening stock at the branch, goods sent to branch, goods returned by the branch and closing stock at the branch must be shown at cost price. If the goods are sent at invoice or loaded price, the load must be deducted and the cost price of these items must only be shown, (b) For ascertaining any information relevant, but missing, other Memorandum Accounts .e.. Memorandum Branch Debtors A/c, Memorandum Branch Creditors A/c, Memorandum Branch Bills Receivable A/c, Memorandum Branch Bills Payable A/c and Memorandum Branch Bank/ Cash A/c must be prepared. (c)__ Since this system involves preparation of Memorandum Branch Trading and Profit and Loss A/c, is not a part of double entry system and hence there is no need of passing any journal entry. iMusératicn 17 [when goods are supplied at cost price From the following particulars relating to Mysure Branch for the year ending March 31, 2015. Prepare branch Trading and Profit and Loss Account in the books of Head Office: t Stock at Branch on 1.4.2014 ae Debtors at Branch on 1.4.2014 oon Petty cash at Branch on 1.4.2014 A Furnituse at Branch on 1.4.2014 1m Scanned with CamScannerBARRA D Prepaid Insurance on 1.4.2014 Salaries outstanding at Branch on 1.4,2014 Cash sales during the year Credit sales during the year 230,000 Goods sent to Branch 7,50,000 Cash received from Branch Debtors 182000 Discount allowed to Debtors 210 Cash sent to Branch for Expenses: Rent 12,000 Salaries 5,400 Petty Cash 400 Insurance (upto 30.6.2015) 1,600 23,000 Goods returned by Branch oon Goods returned by the Debtors 7,000 Stock on 31st March, 2015 38,000 Petty expenses by the branch 2,850 Provide depreciation on Furniture at 10% p.a. In the Books of Head Office Dr._ Branch Trading and Profit and Loss Account for the year ending 31st March, 2015 Cr. Particulars v [Particulars i ei To Opening Stock “40,000 | By Sales at Branch Cash 1,80,000 To Goods sent to Branch 2,50,000 Credit 2,23,000)4,03,000 Less: Returns 4,000 {23000-7000} 2,46,000 To Gross Profit c/d 1,55,000 By Closing Stock 38,000 at Branch 000 To Discount allowed 2,200 | By Gross Profit b/d 1,55,000 To Rent 12,000 To Salaries 5,400 Less: Previous year outstanding Salaries 2,100 | - 3,300 To Insurance 7,600 ‘Add:Previous years prepaid Insurance 4,150 2,750 Less:Current year’s prepaid Insurance 40] 2,350 To Petty Expenses [| 2,850 To Depreciation : on Furniture 1,200 [12000x10%) To General P/L Account 1,31,100 (Profit) |1,55,000. 55,000 Mlustration 18 [when goods are supplied at cost price and credit sales isnot given] “ABengaluru Trader has a Branch at Chennai to which the goods are supplied at cost price. The Chennai Branch keeps its own sales ledger and transmits all cash received to the Head Office every day. All the ‘expenses of the Branch are paid from the Head Office. The transactions for the Branch were as follows: g Scanned with CamScanneradvanced’! inancial Accounting Stock on 1.4.204 aa Debtors on 1.4.2014 pre Petty cash on 1.4.2014 500 Cash Sales Sa Goods sent to Branch aval Cash received from Debtors aad Goods returned to H.0. fan Bad Debts by Allowances to Debtors oon Sales Returns 5 Cheques sent to Branch: sata Wages a i 4,800 Salaries poe Stock on 31.3.2015 aa Debtor on 31.3.2015 io Petty Cash on 31.3.2015, ae iscellaneous Income EJ Solution? Total Debtors Account Or. [To Findout Credit Sales] oF Particulars SSS ee | Particulars S eer To Opening Balance b/d 200 | By Cash Received 42,000 To Credit Sales (Bal. Fig.) 47,900 | By Bad Debts 600 By Alfowance to Debtors 500 By Sales Returns 1,000 By Closing Balance c/d 4,000 48,100 48,100 In the Books of H.0. Dr. __Branch Trading and Profit and Loss Account for the year ending 31.3.2015 Particulars z [> Particulars ReSn IS q To Opening Stock 22,000 | By Cash Sales 5,300 To Goods sent to Branch 32,000 By Credit Sales |_47'00| Less: Returns 480 | 31,520 53,200 To Wages 400 Less:Sales Returns 1,000] 52,200 To Gross Profit c/d 19,080 | By Closing Stock 207800 73,000 [73,000 — To Bad Debts 600 | By Gross Profit b/d 19,080 To Allowances 500 | By Miscellaneous Income 0 To Rent 1,200 To Salaries 1200 To Petty expenses 200 [400-200] To General P/L Account (Profit) 14,830 19,130 Scanned with CamScanner{ilustration 19 [when goods are supplied at invotce Price Bata Limited has a Head Office and many retail branches which are supplied goods from the head office at cost plus 25% profit. Accounts are kept at head office from where all the expenses are paid. From the following balances as shown by the books, prepare Branch Trading and Profit and Loss Account. Balances on 1st April 2014: : Petty Cash at Branch Up Sundry Debtors at Branch ae Stock at Branch at Involce Price beled Furniture and Fixtures 26,000 Rent prepaid Vea Transactions for the year ended 31st March 2015: Goods sent to Branch ae Cash Sales at Branch 2,20,000 Credit Sales at Branch a Allowances to Debtors 1,500 Cash received from Debtors 80,000 Bad debts written off 1200 Payments made by the Head Office: Rent for one year(paid on 1.7.2014) 2,800 Salaries oon Insurance paid for the year ending 30.6.2015 oa Petty Cash at Branch on 31.3.2015 800 Stock at Branch on 31.3.2015 37,500 Write off 10% depreciation on Furniture and Fixtures In the Books of H.0. Branch Trading and Profit and Loss Account for the year ending 31st March 2015 Partieutors z 7 | Partieutars We To Opening Stock 0,000 | By Sales {50,000-10,000] Cash 2,80,000 To Goods sent to Branch 2,43,200 | Credit '95,000 | 3,75,000 [3,04,000-60,600] By Closing stock at Branch To Gross Profit c/d 4.21,800 | (37,500-7,500] 4,053,000 To Allowance 1,500 | By Gross Profit b/d To Bad Debts 1200 To Rent 2,800 Less: Current year's prepald| 700 7,100 ‘Add: Previous year's prepaid) 1,300 | 3,400 To Salaries 12,000 To Insurance 960 Less: Prepald 140 a) To Petty Expenses 500 [1300-800] To Depreciation on Furniture 2,800 [2800x10%) To General P/L Account (Profit) 99,680 1,21,800 {1,21,800° Scanned with CamScannerSection’d 1. Give to features of depended branchs. 2. What do you mean by loading? Now. 1991, apr, 1952) 3. What is the significance of stock reserve account? Nov. 991) 4. Mention two objectives of Branch Accountings. 5. Why are the goods sent by the head office to the branchs at invoice price? LApril, 1998) 6. The Bengaluru head office sends goods to its Hubli branch at a Profit of 20% on cost. If Bengalury head office sends it for %1,20,000. Calculate cost price. TAprit, 1998) What is stock reserve accounts? Distingwish between cost price and loaded price. FAprit, 1991) Find out the commision due to the branch managers if the commission is 15% on net profits after ging such commission and the net profit before changing such commission in 1,415,000. 10, a the loading which 1s 20% of the invoice price of goods, when the cost price of goods is 320,000. 11 Find out loading which is 20% of the invoice price of goods, when the cost price of goods in 80,000, 12. Find out the commission due to the branch manager if the commission in 12% on net profit after Changing such commission and the net profit before changing such commission ts €3,36,000, Section B A. Supply of Goods at Cost Price Method 13. Nilgiri Ltd., Chennai, opened a new branch at Bengaluru. From the following figures relating to the branch, write necessary entries in the books of the company and Prepare Branch Account to ascertain the profit earned there. z Goods sent to Branch 5,000 Cash sent to Branch 200 Cash Sales at Branch 7,000 ‘The branch was advised to sell goods only for cash. There was no stock of unsold goods at the end jwith the Branch, [Ans. Branch Profit 1,200] 14. Mantons Ltd., Bengaluru, opened a Branch at Hubli on ist May, 2014, From the following particulars, Sth marie ant Account and find out the profit or loss made by the Branch for the period ending 30th April, 2015. z z Goods Sent to Branch 16,000 Cash remittance to Branch for: Salaries 2,000 Office Rent 480 Other Expenses 320 2,800 Cash sales effected by the Branch (Remitted to H.0. immediately) 22,000 te Stock of unsold goods on 30.4.2015 2,000 (Ans. Profit #5,200] 2015. Prepare Branch books of Head Office: z Stock on 1.4.2014 8,900 Branch debtors on 1.4.2014 4,700 Branch petty cash on 1.4,2014 by 15. From the following particulars relating to Surpur Branch for the year ending 31.3. ‘Account, Goods sent to Branch Account and Branch Debtors Account in the Scanned with CamScanner16. Goods sent to branch Cash sales Créedit sales Cash received from debtors Cash sent to branch for expenses: Rent Salaries Petty Cash Stock at branch on 31.3.2015, Petty Cash at branch on 31.3.2015 Goods returned by branch Ans. Branch profit *16, 110 Closing debtors ¥7,200) From the following particulars relating to Patna for the year ending 31st March, 2015. Prepare accounts in the Head Office Boot z Stock at Branch on {st April, 2015, 17,800 Branch Debtors on 1st April, 2015 9,400 Petty Cash at Branch on tst April, 2015, a Goods sent to Branch during the year 56,800 Cash sales during the year 31,600 Credit Sales during the year 80,800 Cash received from Debtors 75,800 Goods returned by the Branch 1,600 Cash sent to branch for expenses: z Rent 4,000 Salaries 12,000 Petty Cash 2,000 18,000 Stock at Branch on 3ist March, 2015 — 410,800 Petty Cash at Branch on 31st March, 2015 o [Ans. Closing Debtors 714,400 and Profit 732,220] [Hint: Debtors Balance at the end of the period is not given which is to ke ascertained by preparing Debtor's 7. Account] Hindustan Co.Ltd., invoices goods to its Belagavi Branch at cost. The branch sells the goods on credit ‘aswell as for cash. From the following details prepare the Branch Account, Branch Trading and Profit and Loss A/c for the year ending 31.3.2015. z z Stock 1.4.2014 12,500 Stock 31.3.2015 14500 Debtors 1.4.2014 24,500 Debtors 31.3.2015 36,200 Goods supplied to Branch 5400 Goods supplied by Branch 00 Petty Cash 1.4.2014 150 Petty Cash 31.3.2015 20 Cash remitted to Branch for: Rent 4,200 Salary 4,500 Petty Cash 1,000 6,700 Cash Sales — 32/800 Cash received from customers 32,600 Scanned with CamScanner2g 18. 19. | | | S waaivaliced Fnarelal Accounting 1,500 400 2,30 N.P, £27,700, Credit Sales 748,500 to be Discount allowed to customers Bad debts Goods returned from customers [Ans. ascertained by preparing branch debtors account) From the following information, prepare the Branch Account in the books of the Head Office and the daily collection of the branch are remitted to Head Office: z z Stock 31.3.2015 41,25,000 Stock on 1.4,2014 75,000 Debtors on 1.4.2014 50,000 Debtors on 31.3.2015 70,000 Goods sent to Branch 3,00,000 Cash Sales remitted to Head Office 1,00,000 Goods collected from debtors and remitted to H.0. 140,000 Cash returned from branch 30,000 Cash sent to branch for: Salary 8,000 Rent 2,000 10,000 Petty Cash on 1.4.2014 oe 100 Petty Cash on 31.3.2015 100 Discount allowed to customers 5,000 [Ans, Branch profit %30,000; credit sales 71,65,000) The Union Stores Ltd. invoiced goods to its Surat Branch at cost. The branch maintained its sales ledger and remits all cash received daily to the Head Office. The branch expenses are being paid by the Head Office. The branch expenses are being paid by the Head Office by cheques. From the following details relating to the branch show the branch account In the books of the Head Office. z Debtors (14.2014) 43,100 Debtors (31.3.2015) 16,550 Stock (1.4.2014) 7500 Stock (31.3.2015) 6950 Goods received from H.0. 25,400 Goods returned to H.0. 350 Cash sales and credit sales 45,770 Allowance to Debtors o Cash received from debtors 24,600 Rent, rates, etc. 00 Wages and Salaries 3,000 General trade expenses 650 Returns from customers ~ Discount allowed to customers Gaon Bad debts 00 [Ans, Net profit ¥14,480; Cash sales 716,580 (I.e., credit sales 30,190] een nine tantn Scanned with CamScannereels Branch Accounts B. Supply of Goods at Invoice Price 20. From the following information ascertain the credit sales to the branch customers and prepare Branch Account in the books of the Head Office for the year ending 31.3.2015. All the expenses are paid by the Head Office and daily collections of the Branch are remitted to the Head Office. e Stock on 1.4,2014 75,000 Stock on 31.3.2015 4,25,000 Debtors on 31.3.2015 Les Debtors on 1.4,2014 50,000 Goods invoice to Branch 3,50,000 Cash sales remitted to H.O. 1,50,000 Cash collected from Debtors oy Goods returned to H.0. 25,000 Salary 8,000 Rent 2,000 Petty Cash on 1.4.2014 0 Petty Cash on 31.3.2015 100 The Head Office charges goods to the Branch at 25% above cost. 4,050 [Ans. Profit %80,050] 24. BK Ltd., Belagavi invoiced goods to its Gadag Branch at cost plus 25%. The branch Is allowed to effect both the cash and credit sales, Branch expenses are paid directly from Head Office and all the cash received being remitted to Head Office Account by the branch regularly. The following are the Transactions for the year ending 31.3.2015. z Goods sent to branch at invoice price 40,000 Returns to Head Office at invoice price 800 Stock at branch on 1.4.2014 8,000 Credit sales for the year 30,000 Cash sales for the year 48,700 Debtors on 1.4.2014 5,200 Cash received on ledger accounts 23,500 Discount allowed to customers 300 Bad debts written off 500 Returns from customers 700 Rent and rates 600 Salaries and wages 4,200 Sundry expenses 300 Stock at branch on 31.3,2015 6,000 Prepare Gadag Branch Account, Branch Debtors Account for the year ending 31.3.2015. [Ans. Closing debtors %5,200; Generaf P/L 12,140] 22. The Bharat Stores Ltd., Chennai has a branch at Ballart. Goods are Invoiced to the branch at selling price being cost plus 20% profit. The branch keeps the own sales ledger and deposits all cash Feceived daily to the credit of Head Office Account opened in the State Bank of India, All the expenses are paid by cheques from the Head Office. From the following particulars prepare the Branch Account and Branch Debtors Account In the books of the Head Office: Scanned with CamScanner2B. 24, Stock on 1.4,2014(at Involce price) aoe Debtors on 1.4.2014 or Petty cash on 1.4.2014 be) Goods invoiced from Head Office (at Invoice price) 50 Expenses paid by cheques from Head Office Rates and Taxes sp ‘Sundry Expenses ped Cash sales for the year 0,600 Credit sales for the year om Cash collected from debtors ee Bad debts for the year aon Stock on 31.3,2015(at invoice price) TS Petty cash on 31.3.2015 a [Ans. Branch profit 737,850, Closing debtors ?16,000] From the following particulars prepare the Branch Account and Goods Sent to Branch Account in the books of Head Office. The goods are supplied at cost plus 25%. t Stock on 1.4.2014 at invoice price Fo Sundry debtors at branch on 1.4.2014 22,500 Petty cash on 1.4,2014 60 Goods sent to branch during the year at invoice price 1,50,000 Cash sales 63,000 Credit sales 1,11,000 Goods returned by branch 4,500 Cash sent to branch for: Salaries 10,800 Rent and other expenses 8,400 Petty cash 1,950 Cash received from debtors at branch 4,18,200 Discount allowed to debtors 41,800 Stock at branch on 31.3.2014 at involce price 33,900 Petty cash on 31.3.2015 %” All cash received by the branch is remitted to Head Office. [Ans. Branch profit %40,200; Closing debtors 713,500] Bharat Traders opened.a branch at Ballari on 1.4.2014, Goods are invoiced to the branch at cost plus 20% which {s the selling price. Following are the branch transactions during the year: g Goods supplied to the branch 45,000 Sales at branch: Cash sales 413,000 Credit sales 25,000 Cash received from debtors 48,600 Discount allowed "400 Cash sent to branch for expenses 5,000 Goods returned by branch S000 Closing stock at branch 340 Prepare the branch account in the books of Head Office. [Ans. Branch profit 74,600] Scanned with CamScanner25, From the following information, ascertain sales to the customers of the Branch on credit and prepare the Branch Account in the books of the Head Office for the year ending 31st March 2015. All expenses are paid by the H.0. Be 3 y qT PE 4] Stock on 31.3.2015 90,000] Goods invoiced to Branch 3,60,000 Stock on 1.4.2014 60,000| Rent 3,000 Debtors on 1.4.2014 40,000] Salary 6,000 Debtors on 31.3.2015 60,000] Goods returned to Head Office 6,000 Cash sales remitted to H.O, 1,50,000] Petty cash on 1.4.2014 100 Cash collected from debtors 1,60,000] Petty cash on 31.3.2015, 0 and remitted to Head Office Sales of Gunny bags 200 Goods are invoiced by Head Office at 20 per cent above cost. [Ans. Profit 251, 150;] 26. The Deccan Traders, have their branch in Mumbai to which goods are supplied at selling price being 30% above the cost. The Mumbai Branch keeps its own Debtors’ Ledger and remits all cash collections to the Head Office. The Branch expenses are paid by the Head Office. From the following details, find out the amount of credit sales and prepare the Branch Account in the books of the Head Office. : inal [aon Wee ee: Tia mae] Stock on 1.4.2014 52,000] Goods invoiced to Branch 3,90,000 Stock on 31.3.2015 65,000] Rent, rates, etc. 12,000 Sundry Debtors on 1.4.2014 35,000] Salaries 24,000 Sundry Debtors on 31.3.2015, 48,000| Sundry Expenses 6,000 Cash remittance to Head Office 2,214,000] Petty Cash on 31.3.2015 50 for cash sales Petty cash on 31.3.2015 100 Cash remittance to H.O. 41,43,000] Goods returned to H.0. 2,600 for cash collection from Debtors Misc.Income 100 Tans. Profit ?47, 150) 27. A Dharwad merchant has a Branch at Mysure to which he charges out the goods at cost plus 25 per cent. The Mysure Branch keeps its own Sales Ledger and remits all cash received to the Head Office every day. All expenses are paid by the Head Office every day. From the following particulars prepare Branch Account and Memorandum Branch Trading and Profit and Loss Account, for the year ended 31st December, 1995. Stock (1.42014) 11,000] Cheques to Branch for: Debtors (1.4.2014) 1,700] Rent Petty Cash (1.4.2014) 100] Wages Cash Sales 2,650] Salaries & Other Expenses Goods, sent to Branch 20,000] Stock (31.3.2015) Collection on Ledger A/es 21,000] Debtors(31.3.2015) 2,000 Goods returned to H.0. 400] Petty cash (31.3.2015) including Bad Debts 300] Misc.income 225 remitted 125 Allowances to Customers 250] Returns Inwards 509] Tans. Profit °6, 195} Scanned with CamScanneravaneeaT FinaeTaD ACoUG, 28. The Karnataka Traders have their Branch in Bengaluru to which goods are supplied at selling price being 25% above cost. The Bengaluru Branch keeps its own sales ledger and remits all cash to Head Office daily. The branch expenses are paid by the Head Office. From the following branch details determine the amount of credit sales and show Branch Account in the H.O.Books. & e z Stock on 1.4.2014 at invoice price 50,000] Cash remittance to Head Offic Stock on 31.3.2015 at invoice price 60,000) (of which £2,12,000 are for cash Sundry Debtors on 1.4.2014 28,000] sales and #1,32,000 collection Sundry Debtors on 31.3.2015 36,000] from Sundry Debtors after allowing Goods invoiced to Branch 3,64,000] 71,000 as discounts) 3,44,000 Rent, Rates, Taxes 16,000] Salaries 13,600 Sundry Expenses 3,200 TAns. Profit £36,000) 29. Mumbai Company invoiced goods to their branches at cost plus 1/9th and the branches sell goods ‘on credit as well as for cash, ‘The Poona a branch has sent the following figures for the year ending 31st March 2015. : : q y Sia | SEE Stock, 1st April 2014 15,000] Allowances 580 Stock, 31st March 2015, 13,900] Returns from Debtors 320 Debtors, 1st April 2014 26,200] Discount to Debtors 2,400 Debtors, 31st March 2015 33,100] Bad Debts 600 Goods from H.0. 50,800] Cash received from Ledger A/cs 49,200 Goods returned to H.0. 700] Rent, Rates, etc. 1,800 Credit sates 60,000] Wages and Salaries 6,000 Cash sales 33,500|_Trade Expenses 1,300 The figures of stocks and goods received from H.O. and returned to H.O. are at invoice prices. You are required to show the Branch Account and Branch Account; Branch Debtors Account in the Books of Head Office. [Ans. Profit 34,420] 30, Mr.Veeranna of Gulbarga has branch at Bengaluru. All goods required for branch were supplied at cost plus 25%. All the cash received at the branch was banked daily. From the following particulars, prepare the Branch Account in the books of Head Office: t Stock 1.4.2014 (invoice price) 10,000 Debtors 1.4.2014 12,000 Petty cash 1.4.2014 "200 Petty Cash expenses 250 Total sates 35,000 Stock 31.3.2015 (invoice price) 49,000 Debtors 31.3.2015 20,000 Bad Debts 400 Goods invoiced to branch (invoice price) 30,000 Goods returned from branch (invoice price) 2,000 Branch eypenses paid by the Head Office: Rent 4,500 Salary 43600 Sundry Expenses en Petty Cash 300 Scanned with CamScannerBranch Accounts 32. [Ans. Branch profit *15,400 Loading: 25% on cost=20% on sales=1/5th of Invoice price] Note: Total sales are assumed to be credit sales. (1) Cash received from debtors is found out by preparing branch debtors account which is the balancing figure. (2) Closing petty cash is found out by preparing petty cash account which is the balancing figure] From the following particulars as shown by the books of a branch prepare the Branch Account, Cash account, Branch Debtors and Creditors Accounts: z Balances as on 1.4.2014: Petty cash balance 2,300 Opening stock at invoice price ene Sundry debtors at branch geno) Sundry creditors at branch 11,200 Furniture at branch 28,000 Transactions for the year ending 31.3.2015: Goods sent at branch 4,04,000 Cash sales at branch 5,80,000 Credit sales at branch 8,000 Allowances to debtors ven Cash received from customers on Bad debts written off 1,200 Cash purchases by branch 40,500 Credit purchases by branch 9,800 Cash remittances by Head Office: Rent 2,800 Salaries 12,000 Insurance 960 Petty expenses 480 Balances as on 31.3.2015: Closing stock at cost 30,000 Closing balance of creditors 23,000 Closing petty cash 2,300 Other information: Goods are sent to branch at 20% profit on sale price. Depreciate furniture at 10% per annum. [Ans. Branch profit ?1,79,760] Tripti Sales Ltd., Bengaluru has a branch at Dharwad. The goods are involved to the branch at 20% profit on sales. The branch has been instructed to send all cash received to the Head Office daily and all its expenses are paid by the Head Office. The following is the summary transactions dt the above branch for the year 1998. z Branch stock on 1.4,2014 (at invoice price) 410,000 Branch debtors on 1.4.2014 4,000 Branch petty cash on 1.4.2014 100 Goods sent to branch (at cost price) 50,000 Expenses paid by the head office for: Salary 12,000 Rent 31000 Stationery * 43500 Petty cash 700 17,200 Goods returned by branch SS Hees Scanned with CamScanner3. 34, 35. ‘avanced Financial, Accounting) Cash sates 29,300 Credit sales om Cash received from customers oe Goods returned by customers ho Discount allowed to customers a0 Branch stock on 31.3.2015 (at Invoice price) 2 500 Branch petty cash on 31.3.2015 » From the above prepare the Branch Account and Branch Debtors Account in the books of H.0, tans. Branch toss £4,000. Closing debtors ¢5,000) Prepare Branch Account in Head Office books from the following: z + Goods sent to branch (at invoice price) 1,20,000 Opening stock (at invoice price) an Closing stock (at invoice price) 000 Debtors at the beginning 30,000 Debtors at the end 40,000 Cash sales 1,00,000 Cash received from the debtors en Cash sent to the branch: For Salary 4,000 For rent 2,000 6000 Goods are sent to the branch at cost + 25%. [Ans. Branch profit %84,000) Fromn the fetlowing particulars prepare the necessary ledger accounts in the Books of Head Office under and Debtors System. The Head Office supplied goods to branch at cost + 25%. x z Stock on 1.4.2014 at invoice price 5,000 Debtors on 1.4.2014 3,500 Goods sent to branch at invoice price 16,000 Expenses paid by the head office for: Salary 800 Rent ‘ 300 Other expenses 400 4,500 Cash remitted by branch: Cash sales 2,600 Cash collected from debtors 10,000 12,600 Total sates 49,000 Discount allowed to debtors 200 Goods returned by customers 0 Stock on 31.3.2015 at invoice price 3,000 [Ans, Net Profit: £2,500; Closing Debtors 29,300) poona Stores opened a branch in Bengaluru to which goods are supplied at selling price, being 25% profit on sales. From the following information prepare the necessary ledger accounts in the books of the Head Office under “Debtors System”: t 4. Goods sent from Head Office at invoice price 1,68,000 2. Goods returned from Branch to Head Office at invoice price 18,000 Scanned with CamScanner36. 7 Branch expenses paid by Head Office a Expenses pald by the Branch oe Cash Sates aes Credit Sales bag Cash received by Branch from Branch Debtors ae Discount allowed to Branch from Branch Debtors o Goods returned by customers ied |. Closing stock at branch at invoice price pees 11, Cash remitted by the branch to H.0. ae [Ans: Net profit £14,850; Closing debtors 74,400] Sunanda Mills Ltd. has two branches at Navalgund and Nellikeri. Goods are invoiced to branches at cost plus 50%. Branches remit all cash received to the head office and all the expenses are met by the head office, from the following particulars, Prepare the necessary accounts and show the profit on Debtors System. Particulars Navalgund _—Nellikeri z z Opening stock (at invoice price) 9,300 15,600 Opening debtors 6,800 8,700 Goods sent to branches (at cost price) 34,000 36,000 Sates: Cash 25,010 35,000 Credit 31,000 30,100 Cash collected from debtors 30,400 29,800 Goods returned by debtors 1,200 4,500 Goods returned by branches to H.0. 41,500 : Goods transferred from Nellikeri to Navalgund 2,100 2,100 Closing in stock 5,640 4,200 Discount allowed 200 350 Expenses at branches 5,400 6,700 [Ans, Navalgund: N.P. £12,370, Closing Debtors £6,000. Nellikerl: Net Profit 714,350; and Closing Debtors ¢7, 150] Using " Debtors System” find the profit or loss made by the Belgaum Branch for the year ending 313.2015, Goods are invoiced to branch at a profit of 25% on Invoice price: ' z Stock on°1.4,2014 at invoice price 30,000 Debtors on 1.4.2014 45,000 Goods sent to branch at invoice price 41,20,000 Cash Sales 45,000 Credit Sales 95,000 Cash received from debtors 90,000 Discount allowed to debtors 1,500 Cash sent to branch for expenses: For salary 40,000 For rent 5,000 For other expenses 2,500 Stock on 31.3.2015 at invoice price Closing stock at invoice price 40,000 [Ans. Net profit 716,000, (at invoice price), Closing debtors 718,500]. Scanned with CamScannerTAccounting 38. The Imperial Emporium Ltd. invoiced goods to its branch at cost plus 25%. Prepare the Branch Account. Branch in H.0. Books from the following information: = z 7 EST, Debtors (14.2014) 73,100| Stock (31.3.2015) 6.950 Goods from H.0. 25,400| Discount allowed 1,200 Cash sales 16,750] Bad Debts au Debtors (31.3.2015) 16,550| Rent, Rates a Allowances to Debtors 160] Wages and Salaries 3,000 Total Sales 46,750| Stock (1.4.2014) 7,300 Goods returned to H.0. 350] Trade expenses = Goods returned by Debtors 290 Tans. Received from Debtors 24,600, Profit 719,700]. 39. Following are the details of a New Branch for 2014-15: z é = z Goods sent to Branch 5,000 | Credit Sales 5,200 Goods Returned from Branch 300| Branch Stock (Closing) 1,700 Expenses paid by H.0. 1,000} Branch Debtors (Closing) 7a Remittance from Branch 4,500 | Discount allowed to Customers by Branch 180 Cash Sales 250 Show Branch Account, B in the Head Office Books. [Ans. Cash Received from Debtors: %4,250; i.e. *4,500-250; Profit: ¢1,270]. 40. The Shoe Trading Co.Ltd. invoices goods to Delhi Branch at cost plus 25 per cent. Both cash and credit sales are effected by the Branch. Branch expenses are paid direct from Head Office. The following are the details of the transactions for the six months ended 30th September, 2014: E = Seteoe te ms z Goods from H.0. 20,000] Cash Received from Debtors 11,600 Returns to H.0. 500] Discount allowed 160 Stock (1.4.2014) 5,000] Bad Debtors 300 Credit sales (for half year) 11,000] Returns from Debtors 200 Cash sales (for half year) 10,800] Rent, Rate etc. 240 Debtors (1.4.2014) 3,800] Salaries and Wages 800 Debtors (30.9.2014) 2/540] Sundry Expenses 120 Stock (30.9.2014) 4,000 Record the above transactions in Head Office ledger on debtors system. The stock items, goods returned to Head Office, goods supplied by Head Office are at invoice price. [Ans. Profit 3,580] 41, Bangalore HO of the company invoice goods to its mandya Branch at 20% profit on the sales price "The branch sends cash daily to the HO all expense are paid by HO except for petty expenses “Prepare branch account in the book of HO Bangalore. z Stock on 1.1.2010 15,000 Debtors on 1.1.2010 9,000 Cash on 1.1.2010 ‘40 Furniture on 1.1.2010 4,200 Goods received from HO 80,000 Goods returned to HO 1000 Goods returned by debtors "480 Goods received from Detors 30,000 Cash sales 50,000 Total Sales 30,000 Scanned with CamScannerBrana Accounts 42, Discount allowed to debtors Expenses pald by HO Rent Salary Stationery Petty expense of Branch Stock on 31.12.2010 Depreciation on Furniture at 10% PA. 1,200 2,400 300 280 14,000 [BU, B.Com., 2014] Nischal Traders has a branch at mysore . Goods are sent from the HO at the cost plus 25% . The branch also purchases goods independently from the local parties for which payment is made by the branch itself out of its collections. The branch is advised to deposit cash periodically into HO bank account. From following particulars prepare Branch Account in books of HO for the period ending 31.03.2014. [LE Particutars ; z Branch Petty Cash 20,000 Branch Debtors 2,50,000 Branch Furniture 4,00,000 Stock : Goods sent to HO 2,40,000 Direct Purchase 4,60,000 Cash Sales 4,50,000 Credit Sales 13,00,000 Direct Purchases 4,50,000 Return from Customer to branch 30,000 Goods sent to branch with Invoice 6,00,000 Cash sent to Branch for petty cash 25,000 Bad debts at the branch 40.000 Discounts allowed in branch to debtors ae 20,000 Cash received by Branch from Debtors 12,50,000 Branch rent 30,000 Petty expense paid by Branch manager 35,000 Balances as at 31st March 2014 Branch Petty cash 2 Branch Debtors ? Branch Furniture ? Branch Stock Goods sent by HO 4,80,000 Direct Purchases 4,20,000 Provide depreciation on Branch Fumiture at 10% per annum. [BU, B.Com., 2011] Scanned with CamScanner